By Peter Buzzanell*About 10% of Nation’s Sugar Production Comes from Domestically Grown Beets; Remainder from Imported Raw Cane Sugar Refined in CanadaCanada’s beet sugar production has evolved from several plants to one located in Alberta. The bulk of Canadian sugar supplies come from imported raw cane sugar processed at three refineries, located in Montreal, Toronto and Vancouver, respectively. The resulting refined sugar is marketed to individual buyers in the retail market and mainly to large customers in the country’s beverage and food industry. Corn sweeteners are produced in eastern Canada and compete in sweetener markets with sugar. Canada is also a major producer of maple syrup and honey, with exports going mainly to the U.S. market. Canada has recently initiated anethanol program to mix ethanol with gasoline, using corn and wheat as the major feedstocks.

Sugarbeet Production Higher Of total sugar demand for sugar in Canada, about 10% consists of beet sugar. Canada’s sugarbeet production is concentrated in southern Alberta. In 2010, Alberta growers contracted with the Lantic Inc. (formerly Rogers Sugar) Taber plant for a total of 30,000 acres. The Taber plant has a current daily slice capacity of 7,000 tons. The 2010 harvest began in early September, with factory processing commencing in late September. According to Lantic officials, a total of 30,360 acres of sugarbeets were harvested in Alberta in 2010, yielding 573,640 (metric) tons of beets. This compares with 29,174 acres and 613,376 tons for the most recent five-year annual average (Table 1). The beet sugar produced is marketed as “Rogers Sugar” in the western areas of Canada. The price paid to growers varies considerably and depends on the world sugar market price. As in U.S. sugarbeet districts, key byproducts of the refining process for Alberta beets are dried beet pulp and beet molasses. Dried beet pulp is sold throughout western Canada as a highly nutritious feed for livestock. Beet molasses is sold as a liquid feed supplement for livestock or as an important feedstock in yeast production. In addition to Alberta, 9,500 acres of beets were planted in 2010 in the southwestern tip of Ontario. These beets are transported across the border into eastern Michigan, where they are processed at Michigan Sugar Company’s Croswell factory. Ontario producers also have an ownership stake in Michigan Sugar, which became a cooperative in 2002. Canada’s sugarbeet industry operates under an openmarket policy and has never had a national sugar price support program. However, in 1987 the National Tripartite Stabilization Program was established to protect sugarbeet growers from fluctuating open-market prices. It was a costshare program funded equally by the federal government, the provincial government and beet growers. In 1996, Alberta growers opted out of the program, as its benefits were seen to be too minimal to justify further participation.

A Significant Sugar Importer The bulk of sugar supplies are imported into Canada at world raw sugar prices for refining and sale. During the past five years, raw cane sugar imports have averaged 1.26 million metric tons. Leading suppliers were Brazil, Guatemala and Australia, which together accounted for three-fourths of the total (Figure 1). The three refineries in Canada that refine imported raw cane sugar are as follows: • Rogers’ Vancouver refinery services western Canada and has a daily melting capacity of 1,000 tons, along with storage capacity for 30,000 tons of raw sugar and 14,000 tons of storage for refined sugar. • The Lantic refinery, owned in part by Rogers Sugar, is located in Montreal and services eastern Canada. It has a daily melting capacity of 1,900 tons and a storage capacity of 55,000 tons of raw sugar and 10,000 tons storage for refined sugar.

• The third refinery is the Redpath facility located in Toronto, which services mainly the heavy population and sugar using industries in Ontario. Redpath is the largest Canadian sugar refinery, with a rated daily melting capacity of 2,160 tons, for an annual capacity of more than 700,000 tons. This refinery has a storage capacity of 60,000 tons of raw sugar and 9,000 tons for refined sugar. In 2007, the refinery was sold by Tate & Lyle to American Sugar Refining, Inc. Logistically, Redpath has to plan for the annual closing of the port of Toronto due to ice buildup. The port is closed to shipping from December to mid-April, so the refinery needs to store raw sugar for refining during the winter season.

Canada also imports a small volume of refined sugar each year. Refined imports, mainly from the U.S., averaged nearly 48,000 tons annually during the past five years (Figure 2). Due to “rules of origin,” Canada’s U.S. refined sugar tariff rate quota (TRQ) imports of 10,300 tons are supplied by the Taber facility since that sugar is Canadian grown and processed. Under the “firstcome, first served” rule for the global portion of the refined sugar TRQ — 7,090 tons — Canadian refineries can participate, as the refined sugar doesnot have to be Canadian origin. With respect to the in-quota amount of 64,709 tons for the TRQ on certain sugar-containing products (SCP) maintained under the Harmonized TariffSchedule of the United States, the U.S. government allocates 59,250 tons toCanada. According to staff at one of the Canadian refineries, they take advantage of this SCP quota for Canada by shipping a significant volume of ice tea mix, greater than 10% sugar, annuallyto the U.S. market.

Sweetener Consumption, Demand Diverse Canada utilizes the full range of sweeteners: sugar, corn sweeteners and high-intensity sweeteners. In addition, maple syrup and honey are produced and widely used and exported. Sugar consumption in Canada is fairly steady at 1.4 million metric tons (Table 2). The nation has a population of about 34 million which is largely located along the U.S. border. Ontario alone has a population estimated at 13 million, 38% of the national total. Three cities — Toronto, Montreal and Vancouver — total 11 million people, one-third of Canada’s entire population. Sugar consumption patterns for the bulk of the population mirror those in the U.S. The retail-direct consumption market represents about 16% of total use, and its selling price is comparable to that in the U.S. According to Canadian sugar industry representatives, per-capita sugar consumption has been steady for years, and the industry relies on population growth to expand its market. Canada’s large Asian immigrate population does not constitute a sizeable share of the direct consumption market, reflecting a non-tradition of baking and heavy direct sugar use. This is in contrast to the traditions of the rapidly growing Hispanic community in the U.S. Industrial users represent about 84% of total sugar use and are a growingmarket. The confectionery industry, in particular, is a large and growing industrial user of sugar. While the domestic market has grown, sugar for products to be exported has expanded greatly. For example, Canadian confectionery exports climbed from $370 million in 1996 to $1.35 billion in 2008. The sugar industry faces competition for industrial markets from corn sweeteners. Canadian industrial corn is widely grown; however, Ontario and Quebec are the largest producers with more than 350 million bushels harvested annually. Canada is also a significant importer of U.S. corn. Virtually all of the carbonated soft drink market is sweetened by highfructose corn syrup (HFCS), though some small soft drink plants may still be using some sugar. The largest producer of HFCS and other corn sweeteners in Canada is the CASCO Company, a division of Corn Products’ International. CASCO has three corn refining facilities in Ontario — Cardinal, Port Colborne and London — that produce high-fructose and glucose syrups used to sweeten a variety of products, including beverages, baked goods, canned foods, ice cream and candies. Dextrose is used for its light sweetness, texture, bulking and color in a variety of food and confectionery applications. Corn oil is used in cooking and as an ingredient in margarine.

Canadian per-capita sugar consumption has been steady for years, and the industry relies on population growth to expand its market.

While CASCO markets these products mainly in Canada, the Port Colborne plant also produces HFCS for the northeast U.S. For diet products, such as diet soft drinks, aspartame has been permitted for use as a food additive in Canada since 1981 and is the most prominent. It is also used in desserts, breakfast cereals and chewing gum. In recent years, Canada has approved the use of other high-intensity sweeteners such as acesulfame-k and sucralose, which now compete in the marketplace with aspartame. Canada is a major producer and exporter of maple syrup. Quebec is the main producing province, and its output has nearly doubled in recent years. Imports from Canada supplant the annual U.S. domestic shortfall, according to USDA. Of Canada’s total maple syrup exports, nearly one-half is shipped to the U.S. Canada is also a significant producer and user of honey. Annually, Canada is also one of the leading sources of U.S. honey imports. New Ethanol Initiative Canada recently embarked on an ethanol program with the goal of increasing its domestic production and use. On December 15, 2010, the Canadian government’s Renewable Fuels Standard officially came into force. Officially, 5% of the gasoline Canadians pump into their vehicles is now ethanol. This renewable transportation fuel, using corn and wheat as the primary feedstocks, is designed to reduce transportation-related greenhouse gas emissions. Plans are to build and expand plants to develop capacity to approximately 1.0 billion liters per year. Biodiesel is also expected to expand with implementation of a requirement for 2% renewable content in diesel fuel. According to Environment Canada, regulating renewable fuel content in gasoline is just one of several steps the government is taking to reduce greenhouse gas emissions in the transportation sector, which account for about a quarter of those emissions. Support for renewable fuels is seen as support for farmers, rural communities and the economy, Canada’s minister of agriculture has noted. The Canadian Renewable Fuels Association touts ethanol and biodiesel plants across Canada. Some are already in operation; others are in the planning stage. The goal is to reduce Canada’s total greenhouse gas emissions by 17% from 2005 levels by 2020. 􀀀 * Peter Buzzanell is the director of Virginia-based Peter Buzzanell, LLC. Prior to his retirement from USDA, he was head of the Sugar & Sweetener Analysis Unit at that agency’s Economic Research Service